Interim Results
Aberdeen Asian Smaller Co's Inv Tst
10 April 2006
ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC
ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS
for the six months ended 31 January 2006
Highlights
• Share price up 15.3%
• Share price premium to diluted net asset value (diluted NAV) up
from 1.7% to 3.2%
• Diluted NAV rose 12.9%
• 1.025 million Shares issued in period, raising new funds of
£2.8m
• Economies in Asia appear to be on a firmer footing, supported by
the improving quality of corporate earnings
and the still reasonable valuations of companies
• Despite their impressive share price performance, Asia's smaller
companies still offer considerable long-term value
Chairman's Statement
Background
I am happy to inform you that the Company's portfolio continued to perform
strongly in the six months to 31 January 2006 with the Company's share price
rising 15.3% and the premium to diluted NAV at which the shares trade rising to
3.2%. This compares to an increase in the diluted NAV of 12.9%. The variance
between the movements in the diluted NAV and the share price reflects the
portfolio performance together with the increase in the premium to NAV at which
the Company's shares traded during the period.
As there is no readily available benchmark that tracks Asian smaller companies,
the Manager uses a broad index for comparative purposes, in particular, the MSCI
AC Asia Pacific Free ex-Japan Index, which returned 13.5% over the same period.
I am also pleased to report that, to the continuing credit of Hugh Young and
your investment team based in Singapore, the Company has been awarded the "Best
Asia-Pacific Investment Trust" award from Money Observer for the second year
running.
Overview
The six months under review saw Asian markets make further headway and build on
their strong gains from the first-half of 2005. Liquidity continued to flow into
the region, triggering a re-rating of regional markets. This was despite the
continued concerns on the external front that included record high oil prices
and rising interest rates.
By far the best performing major market was South Korea, which rallied on the
back of improving economic fundamentals and increased participation by domestic
investors. This was followed by India, where stocks rose to record highs. Here,
foreigners took the lead, investing more than US$5bn into the market over the
six months.
Economic news across the region was generally good over the period. China's GDP
grew by 9.9% in 2005, while growth in the rest of the region also held up well.
A recovery in Singapore's manufacturing and services sectors supported its
growth rate in 2005, while India's economy remained on track on the back of
healthy domestic consumption and stronger growth in the manufacturing and
services sectors.
Meanwhile, on the monetary policy front, cuts in fuel subsidies in the face of
rising oil prices prompted central banks, such as those in Indonesia and
Thailand, to raise interest rates to curb oil-induced inflationary pressures.
The Portfolio
Over the six months, the Manager initiated a position in the Malaysian stock
exchange, Bursa Malaysia, which offers long term restructuring potential, and is
a good proxy for the domestic market. Against this, the Manager sold out of
Korea's Cheil Communications on valuation grounds, as well as Shinsegae Foods on
deteriorating business conditions. The Manager also exited Hong Kong's IDS Group
on valuation grounds.
Share Issuance/Gearing
During the period under review the Company continued to issue new shares for
cash to meet market demand. A total of 1.025 million new shares were issued at
an average premium to the underlying net asset value of approximately 4% raising
a total of £2.8 million. The Board will continue to issue new shares for cash
as and when there is unfulfilled demand in the market.
The Board continues to review the level of its gearing and is responsible for
the overall gearing strategy for the Company, under advice from the Manager. At
31 January 2006 the equivalent of £8.5 million was drawn down under the
Company's revolving multi currency facility with AIB, representing 8.5% of the
Company's net assets.
Outlook
The Manager continues to be optimistic about the long-term economic prospects
for Asia. Economies appear to be on a firmer footing, supported by the improving
quality of corporate earnings and the still reasonable valuations of companies,
although the run-up in share prices over the past 12 months has meant that the
discounts to large caps have narrowed significantly. Looking ahead, domestic
demand is expected to take on an increasing prominence over exports.
Nonetheless, Asia's smaller companies still offer good long-term value, with the
portfolio on a price earnings multiple of 17.9 times based on 2006 earnings
(according to the Manager's own estimates), and a headline dividend yield of
3.2%. In terms of strategy, the Manager will maintain focus on investing in
attractively valued companies with sound business models and strong balance
sheets, which are run by professional management. We continue to be confident
about your Company's prospects.
Nigel Cayzer
Chairman
7 April 2006
Aberdeen Asian Smaller Companies Investment Trust PLC
Income Statement (unaudited)
Six months ended 31 January Six months ended 31 January 2005
2006
(restated)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 12,182 12,182 - 12,383 12,383
Income 1,620 - 1,620 1,376 - 1,376
Investment management fee (435) - (435) (328) - (328)
Administrative expenses (298) - (298) (250) - (250)
Exchange gains 14 48 62 - 152 152
_______ _______ _______ _______ _______ _______
Net return before finance costs and taxation 901 12,230 13,131 798 12,535 13,333
Interest payable and similar charges (219) - (219) (165) - (165)
_______ _______ _______ _______ _______ _______
Net return on ordinary activities before 682 12,230 12,912 633 12,535 13,168
taxation
Taxation on ordinary activities (187) - (187) (234) - (234)
_______ _______ _______ _______ _______ _______
Net return on ordinary activities after 495 12,230 12,725 399 12,535 12,934
taxation
_______ _______ _______ _______ _______ _______
Return per Ordinary share (pence):
Basic 1.67 41.20 42.87 1.48 46.54 48.02
_______ _______ _______ _______ _______ _______
Fully-diluted 1.46 36.16 37.62 1.32 41.52 42.84
_______ _______ _______ _______ _______ _______
The total column of this statement represents the profit and loss account of the
Company.
The financial statements have been restated to reflect the change to accounting
policies as set out in the accompanying notes.
The Company has no recognised gains or losses other than those recognised in the
income statement above.
All revenue and capital items are derived from continuing operations.
Reconciliation of Movements in Shareholders' Funds (unaudited)
As at 31 January 2006
Six months ended Share Capital Capital Capital
31 January 2006 Share premium Special Warrant redemption reserve reserve Revenue
capital account reserve reserve reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 July 2005 as 7,214 4,194 14,990 2,275 2,062 17,581 33,513 755 82,584
previously reported
Adjustments (see note 2) - - - - - - (497) 995 498
______ ______ ______ ______ ______ ______ ______ ______ ______
Balance at 31 July 2005 7,214 4,194 14,990 2,275 2,062 17,581 33,016 1,750 83,082
(restated)
Net return on ordinary - - - - - 2,167 10,063 495 12,725
activities after taxation
Dividends paid - - - - - - - (997) (997)
Issue of Ordinary shares 633 3,686 - - - - - - 4,319
______ ______ ______ ______ ______ ______ ______ ______ ______
Balance at 31 January 2006 7,847 7,880 14,990 2,275 2,062 19,748 43,079 1,248 99,129
______ ______ ______ ______ ______ ______ ______ ______ ______
Six months ended Share Capital Capital Capital
31 January 2005 Share premium Special Warrant redemption reserve - reserve - Revenue
capital account reserve reserve reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 July 2004 as 6,689 - 14,990 2,275 2,062 14,409 11,404 503 52,332
previously reported
Adjustments (see note 2) - - - - - - (345) 829 484
______ ______ ______ ______ ______ ______ ______ ______ ______
Balance at 31 July 2004 6,689 - 14,990 2,275 2,062 14,409 11,059 1,332 52,816
(restated)
Net return on ordinary - - - - - 2,222 10,313 399 12,934
activities after taxation
Dividends paid - - - - - - - (829) (829)
Issue of Ordinary shares 200 1,436 - - - - - - 1,636
______ ______ ______ ______ ______ ______ ______ ______ ______
Balance at 31 January 2005 6,889 1,436 14,990 2,275 2,062 16,631 21,372 902 66,557
(restated)
______ ______ ______ ______ ______ ______ ______ ______ ______
Balance Sheet
As at As at As at 31 January
31 January 2006 31 July 2005
2005
(unaudited) (audited) (unaudited)
(restated) (restated)
£'000 £'000 £'000
Fixed assets
Investments at fair value through profit and loss 106,466 89,650 72,928
Current assets
Debtors 611 1,509 78
Cash at bank and in hand 1,007 1,145 2,277
___________ ___________ ___________
1,618 2,654 2,355
Creditors: amounts falling due within one year
Bank loans (8,454) (8,509) (8,036)
Other creditors (427) (654) (681)
___________ ___________ ___________
(8,881) (9,163) (8,717)
___________ ___________ ___________
Net current liabilities (7,263) (6,509) (6,362)
___________ ___________ ___________
Total assets less current liabilities 99,203 83,141 66,566
Provision for liabilities and charges (74) (59) (9)
___________ ___________ ___________
Net assets 99,129 83,082 66,557
___________ ___________ ___________
Share capital and reserves
Called-up share capital 7,847 7,214 6,889
Share premium account 7,880 4,194 1,436
Special reserve 14,990 14,990 14,990
Warrant reserve 2,275 2,275 2,275
Capital redemption reserve 2,062 2,062 2,062
Capital reserve - realised 19,748 17,581 16,631
Capital reserve - unrealised 43,079 33,016 21,372
Revenue reserve 1,248 1,750 902
___________ ___________ ___________
Equity Shareholders' funds 99,129 83,082 66,557
___________ ___________ ___________
Net asset value per Ordinary share (pence):
Basic 315.84 287.94 241.55
___________ ___________ ___________
Fully-diluted 283.69 251.25 212.88
___________ ___________ ___________
Cash Flow Statement (unaudited)
Six months ended Six months ended
31 January 2006 31 January 2005
£'000 £'000
Net cash inflow from operating activities 1,770 786
Net cash outflow from servicing of finance (218) (166)
Net tax paid (292) -
Net cash outflow from financial investment (4,713) (307)
Equity dividends paid (998) (829)
___________ ___________
Net cash outflow before financing (4,451) (516)
Net cash inflow from financing 4,319 1,462
___________ ___________
(Decrease)/increase in cash (132) 946
___________ ___________
Reconciliation of net return before finance costs and
taxation to net cash inflow from operating activities
Net return before finance costs and taxation 901 798
(Increase)/decrease in accrued income (46) 73
Decrease in other debtors 967 40
Increase in other creditors 6 7
Overseas withholding tax suffered (58) (132)
___________ ___________
1,770 786
___________ ___________
Reconciliation of net cash flow to movements in net debt
(Decrease)/increase in cash as above (132) 946
Cash inflow from increase in loans - 169
___________ ___________
Change in net debt resulting from cash flows (132) 1,115
Exchange movements 49 150
___________ ___________
Movement in net debt in the period (83) 1,265
Opening net debt (7,364) (7,024)
___________ ___________
Closing net debt (7,447) (5,759)
___________ ___________
Represented by:
Cash at bank and in hand 1,007 2,277
Debt falling due within one year (8,454) (8,036)
___________ ___________
(7,447) (5,759)
___________ ___________
Notes to the Financial Statements
1. Accounting Policies
The accounts have been prepared under the historical cost convention, as
modified to include the revaluation of investments and in accordance with
applicable Accounting Standards and with the Statement of Recommended Practice
for "Financial Statements of Investment Trust Companies" issued in December
2005.
For the accounting period beginning on 1 August 2005 the Company had the option
to prepare its financial statements in accordance with International Financial
Reporting Standards ('IFRS'), as adopted by the International Accounting
Standards Board ('IASB'). The Board has elected to continue to adopt UK
Generally Accepted Accounting Principles ('UK GAAP') and therefore with the new
Financial Reporting Standards issued as part of the programme to converge UK
GAAP with IFRS. Figures for the six months ended 31 January 2005 and year ended
31 July 2005 have been restated accordingly.
The same accounting policies used for the year ended 31 July 2005 have been
applied with the following exceptions:
(a) Investments are measured initially at cost and are recognised at trade date.
For financial assets acquired, the cost is the fair value of the
consideration, with changes in fair value going to the profit and loss account.
Subsequent to initial recognition investments are valued at fair value. For
listed investments this is assumed to be bid market prices.
(b) Under FRS 21 "Events after the Balance Sheet Date", dividends should only be
accrued in the accounts if they are a liability at the Balance Sheet date. The
financial statements for the year ended 31 July 2005 and 31 July 2004 have been
restated to remove the final dividends that were accrued at those dates.
The impact of these changes are shown in note 2.
2. Restatement for first time adoption of revised UK GAAP
As at As at As at
31 July 31 January 2005 31 July
2005 2004
(audited) (unaudited) (audited)
Reconciliation of Balance Sheets £'000 £'000 £'000
Net assets as previously reported 82,584 66,867 52,332
Restatement of investments at bid value (497) (310) (345)
Reversal of provision of final dividend 995 - 829
___________ ___________ ___________
Restated net assets 83,082 66,557 52,816
___________ ___________ ___________
Six months ended
31 January 2005
(restated)
Reconciliation of the Income Statement £'000
Total transfer to reserves per originally reported Statement of Total Return 12,899
Change from mid to bid basis 31 July 2004 345
Change from mid to bid basis at 31 January 2005 (310)
___________
Restated net return on ordinary activities after taxation per Income Statement 12,934
___________
Ordinary dividends on equity shares deducted from reserves are analysed below:
Six months ended Six months ended Year ended
31 January 31 January 31 July
2006 2005 2005
£'000 £'000 £'000
Ordinary dividends on equity shares:
Prior year final dividend 995 829 829
________ ________ ________
Six months ended Six months
ended
31 January 2006 31 January 2005
3. Income £'000 £'000
Income from investments
UK dividend income 34 -
Overseas dividends 1,544 1,345
___________ ___________
1,578 1,345
___________ ___________
Other income
Deposit interest 42 31
___________ ___________
Total income 1,620 1,376
___________ ___________
Six months ended 31 January 2006 Six months ended 31 January 2005
(restated)
4. Return per Ordinary share Revenue Capital Total Revenue Capital Total
Basic
Net revenue on ordinary activities 495 12,230 12,725 399 12,535 12,934
after taxation (£'000)
_________ _________ _________ _________ _________ _________
Weighted average number of shares 29,682,118 29,682,118 29,682,118 26,933,448 26,933,448 26,933,448
in issue
_________ _________ _________ _________ _________ _________
Basic return per share (p) 1.67 41.20 42.87 1.48 46.54 48.02
_________ _________ _________ _________ _________ _________
Fully-diluted
Number of dilutive shares 4,135,719 4,135,719 4,135,719 3,256,205 3,256,205 3,256,205
_________ _________ _________ _________ _________ _________
Diluted shares in issue 33,817,837 33,817,837 33,817,837 30,189,653 30,189,653 30,189,653
_________ _________ _________ _________ _________ _________
Diluted return per share (p) 1.46 36.16 37.62 1.32 41.52 42.84
_________ _________ _________ _________ _________ _________
The calculation of the fully diluted revenue and capital returns per Ordinary
share are carried out in accordance with Financial Reporting Standard No. 14,
"Earnings per Share". For the purposes of calculating diluted revenue and
capital returns per Ordinary share, the number of Ordinary shares is the
weighted average used in the basic calculation plus the number of Ordinary
shares deemed to be issued for no consideration on exercise of all Warrants by
reference to the average share price of the Ordinary shares during the period.
The calculations indicate that the exercise of Warrants would result in an
increase in the weighted average number of Ordinary shares of 4,135,719 (2005 -
3,256,205) to 33,817,837 (2005 - 30,189,653) Ordinary shares.
As at As at As at
31 January 2006 31 July 31 January 2005
2005
5. Net asset value (restated) (restated)
Attributable net assets (£'000) 99,129 83,082 66,557
Number of Ordinary shares in issue 31,386,208 28,854,100 27,554,100
Net asset value per Ordinary share (p)
Basic 315.84 287.94 241.55
____________ ____________ ____________
Fully-diluted 283.69 251.25 212.88
____________ ____________ ____________
The fully-diluted net asset value per Ordinary share has been calculated on the
assumption that 5,492,292 (31 January 2005 and 31 July 2005 - 6,999,400)
Warrants in issue were exercised on the first day of the financial year at 100p
per share, giving an average of 36,878,500 (31 January 2005 - 34,553,500; 31
July 2005 - 35,853,500) Ordinary shares.
6. Transaction costs
During the period expenses were incurred in acquiring or disposing of
investments classified as fair value though profit or loss. These have
been expensed through capital and are included within gains on investments
in the Income Statement. The total costs were as follows:
Six months ended Six months ended Year ended
31 January 2006 31 January 2005 31 July 2005
£'000 £'000 £'000
Purchases 24 18 44
Sales 21 29 42
____________ ____________ ____________
45 47 86
____________ ____________ ____________
7. The financial information for the six months ended 31 January 2006 and 31
January 2005 comprises non-statutory accounts within the meaning of Section
240 of the Companies Act 1985. The financial information for the year
ended 31 July 2005 has been extracted from published accounts that have
been delivered to the Registrar of Companies and on which the report of the
auditors was unqualified. The interim accounts have been prepared on the
same basis as the annual accounts, with the exception of the disclosures in
note 1 above.
Aberdeen Asset Management PLC
Secretaries
7 April 2006
Independent Review Report to Aberdeen Asian Smaller Companies Investment Trust
PLC
Introduction
We have been instructed by the Company to review the financial information and
we have read the other information contained in the Interim Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of management and applying analytical procedures to the financial information
and underlying financial data, and based thereon, assessing whether the
accounting policies and presentation have been consistently applied, unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 January 2006.
Ernst & Young LLP
7 April 2006
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